volatile week for the markets. that's the first hour of the "closing bell." here's maria and jamie dimon coming up in a moment on the second hour. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo coming to you from northern california. stocks closing out what has been a dismal week for the bulls. we're finishing a choppy session on the week with a fractional move. really unchanged. the dow jones industrial average finishing up two-thirds of a point. the s&p 500 tonight picking up 2.25%. let's get to the market right now with a look at the day. michael santoli and rick santelli joining us. rick, tell me what the act was like today in chicago as the market for equities was all over

the map. >> it was, but all the traders normally behind me are gone. futures closed an hour ago. on the left screen they had a one-minute chart of the s&p futures. on the other screen, a one-minute chart of the ten-year. it was all about the stock market today. just consider this, right before we knew the president was re-elected, the yield on a ten-year note was 175. here we sit at 161. unchanged from yesterday. still it down ten basis points from its last friday close at 171. pretty pitmuch most of the lowe yooel yields are based on uneasiness. fiscal cliff, raising taxes in a slow economy. all of it is coming home to roost. >> mike, we had the president come out saying that he will veto any legislation that allows the tax cuts to be extended for the highest earners. is that what poured water on the rally? >> it didn't hurt. obviously, there was no

breakthrough. i think the one thing to take away from today's action was the fever kind of broke a little bit in terms of the market really being hyper actively responding to every little knnuance. i think the market would have liked to see a little more affirmative suggestions that were going to come closer together. i don't think it was something that alarmed everybody, considering the height of panic that built up over a couple days. >> all right, guys. thanks so much. appreciate that. it has been a week to forget for the bulls. tough week after the election. courtney reagan wraps up the big losers and mixes in a few silver linings on the upside. court, over to you. i don't hear her. okay. courtney reagan, obviously her microphone, we're going to fix that in a moment and get back to her. meanwhile, jpmorgan chase, the nation's largest bank has close

to $2 trillion in assets under management, plus, the firm has a war room set up to tackle the fiscal cliff. now with the election behind us, how is chairman and ceo jamie dimon navigating through the uncertainty that persists in washington? joining us right now in an exclusive to talk about that and more, jamie dimondimon, chairma ceo of jpmorgan chase. thanks for joining us. >> great to be here. >> big week. obviously, the election. the president getting re-elected. give us your sense in terms of what the impact of four more years of president obama will be on business and on jpmorgan. >> well, i think the first thing is the foundation of business is actually pretty strong. companies are in very good shape. a lot of cash. if you look at the numbers, housing looks like it's turning. household formation is going up. consumers have consumers are still spending. the american economy, to me the most important thing is we solve the sort-run fiscal cliff and the longer run fiscal issues. i think if we do that, the

economy can boom. i hope that president obama, you know, works on that. i think he has been working on that. >> and you've been traveling a lot. i know technology has been important as well. i want to get to that in a moment. you mentioned the fiscal cliff. let's stay there for a moment. what are the implications of going over the fiscal cliff. you've been vocal on this subject. you created a task force. you've take an lead in terms of fixing the debt. what are the implications of going off that fiscal cliff? >> let's separate the two. jpmorgan is one of a couple hundred companies getting involved in fix the debt. it's everybody. there's the long run. so fix the debt is more like a simpson-bowles solution. we need a solution. business generally has been supportive of a solution that fixes the problem. we just want a rational, thoughtful solution. the immediate one is this cliff, which is december 31st, midnight, $600 billion. a static analysis, which says the economy dropped by 3 or 4%.

the world isn't static. before december 31st, you might see the effects. also, it might be worse than 300%. as people react and try to protect themselves from a possible impending recession. >> that's what everyone is saying. why would i move if i don't know what my tax rates are going to be? i'll just sit on cash and wait for some clarity. >> right. that's why i think it's incumbent upon us to fix it as soon as we can. then get, you know, to the harder work. >> clearly, dodd-frank, volcker issues don't go away. what about elizabeth warren? >> i had a fine relationship with her. i called her up to congratulate her for winning the election. we work together well. we are going to meet all the rules, all the requirements in the spirit in the letter of the law. the most important thing to me is while doing that, we can

serve the corporations we have here. consumers, businesses. for the most part, those things may change pricing, some returns, and some businesses. i think we can meet them all. the only one that actually us where we want to be cautious is where jpmorgan isn't allowed to freely compete on the same terms as a deutsch bank or choinese bank. >> that makes a lot of sense. you're not seeing your competitors under the same restrictions. >> that's correct. it's whether the united states applies those laws to us overseas. they can't apply them to another bank. if those laws tie our hands too much, that would be an issue for jpmorgan. i don't think it's going to happen. but they haven't all been resolved. we are still waiting to see the final rules and regulations. >> it certainly has taken a while to get these things implemented. i guess the volcker rule is very hard to define. >> yes. >> that's one of the issues. >> it should have been written

much more specifically and not so wide open. you can see people struggling to come up with it. i think there are ways to do it. we've offered the regulators, here are ways we can apply the law, apply it fairly, protect companies, and much simpler than having 180 rules. more like six or seven. we already fixed the major part. more capital, more liquidity, more transparency. >> let me ask you about your capital. the federal reserve approving your $3 billion buyback plans for the first quarter of '13. how should investors be reading into this? the no objection from the fed happened sooner than people expected. it was a a positive. but how should investors read into the implications? do you envision changing your capital requests? january? >> this is just for the first quarter, the $3 billion. we have to apply again sometime in january for the 12 months starting march 31st.

we've shown our shareholders we have huge amounts of capital, capital flow, cash flow. even if we buy back $20 billion of stock or so in 2013 and 2014, we would have at 10.5%. we've got a huge amount of capital. we have to look at the new rules. we'll apply again. i would assume we have the ability to both raise the dividend if the board sees fit and to buy back a lot of stock. we have to wait until we see the final rules. >> i want to follow up on that. in terms of the regulatory environment, this so-called systemically important financial institutions, too big to fail. you are part of one of those. the fed came out with new capital buffers. jpmorgan and citigroup seem to be -- they are at the top of the list in internships of the buffers, the amount of capital that you are supposed to hold. you have to hold a 2.5% buffer while most other banks have a 1.5% buffer. every time we talk about jpmorgan, people say the

fortress balance sheet. you're the strongest bank out there. why is it you have to have a 2.5% buffer when everyone else has a 1.5% buffer? >> anywhere from 0 to 2.5. banks are all different levels. i believe in capital. i believe in liquidity. i think our balance sheet is a fortress balance sheet right now. i never said we actually need the capital. regulators and politicians deemed that has to be necessary. it is what it is at this point. the way it gets calculated is peculiar. if you dig in the calculation, i don't agree with with the way they do that either. it actually penalizes successful companies. it penalizes trade finance. it penalizes conservative investing. i just think that calculation should be modified. maybe when it gets modified, you know, jpmorgan won't need that much more capital. >> investors want to know. this has a direct result on return. will you hold 9.5% of your capital as tier one capital by the end of 2013? what does that do to returns? >> we have 8.5 today.

we think just doing a few additional things we'd be at 9.5 today. fully phased in. we already have that level. we're going hit 9.5 at one point next year. we'll have huge capital generation over that. in february, we're going to tell our investors we're going to reallocate capital, buy line of business. we're going to reallocate the liquidity. it will affect our return targets. we can still have return. >> i guess i'm trying to figure out, is the fed being, you know, stricter? is the fed being, you know, more aggressive here? you know, what should we expect in terms of your capital strategy given the current economic backdrop? we know we have an anemic backdrop, ongoing regulatory scrutiny among regulators, ongoing elevated legacy mortgage related costs. that's what investors want answered. >> we support a lot of these changes, not all of them. we have a great company.

business is growing. we're making mortgages. middle market loans are up ten straight quarters. small business loans are at a record. trade finance is up. we're doing fine. all this stuff is just capital liquidity. and they're global. remember t th remember, this isn't just the fed. by the way, they should be ap y applied fairly. there's a supervisor looking at the application to make sure it's not bad for one country or bank and good for another country or bank. we're going to adjust to them all. life will be okay. if we got to make modifications to our business, we'll do that too. again, i look at the clients. we're doing a lot of corporate business. we're doing a lot of small business, a lot of middle market. we're doing a lot of investing. we'll be fine. we'll fig youre out a way to ge good return. >> given where we are on taxes, is a buyback more in your interest than a dividend increase? >> it all relates to the stock price. we've always said -- we made it

clear we think buying our stock back at tangible book value is a bargain but not a great high prices. the board will have to decide what they think is better for shareholders, more dividends or the ability to buy back more stock when you can. >> all right. we're going to take a short break. when we come back, i want to ask you about housing. then i want to ask you about head count. a lot of layoffs going on. i want to know if you think more are coming. we'll be right back. more with jamie dimon after this short break. stay with us. one mobile. with features like scanning a barcode to get detailed stock quotes to voice recognition. e-trade leads the way in wherever, whenever investing. download the ultimate in mobile investing apps, free, at e-trade.

welcome back to our special coverage from the jpmorgan technology ceo conference. once again, our special guest jpmorgan chairman and ceo jamie dimon. jamie, you have raised the reasonable loss above existing accruals about $700 million to $6 billion. i guess at the end of the day, litigation is the new normal in your business, certainly for the large banks. can you characterize for us what you would expect? how steep, given the election, the perceived political undertones, how significant will ongoing litigation be, and how should investors think about this? >> we have booked more than $10 million in litigation reserves.

that number is just an estimate of how much more is under the range of possibility. i wouldn't give it too much credence. it's a rough estimate. i think litigation costs have become a big deal for all business. it's too much. bids businesses are bearing so much cost we have to bring it down, banks in particular. eventually, some of this stuff will go away for banks. hopefully we're reserved properly and they'll come down over time. >> over the last four years, want president has had a real antagonistic relationship with business. is there a way to work together, collaboration between business and the political story? you said it yourself, business is doing well. all we need to do is unlock that. >> yeah. i just came back from a two-week trip to asia, a week in silicon valley. asia has great growth opportunities. this is the greatest economic engine ever built.

you go around here, the innovation, the growth, the work ethic, the capability, the ability to spend capital expenditures. america is still the best there is. so to me, this is the greatest engine. it's growing slowly. it's waiting to be ignited. i have enormous respect for the president. i just think that business and government collaborating as a much better chance than an tag nating. if president obama is re-elected can it be fixed? of course. most ceos i know i want to work with government. they want to make things work. they want to create jobs, opportunity for everybody. hopefully that need will go back and it'll take everyone a little bit to say, let's just start collaborating. let's get our hands together. let's get this country working again and stop fighting each other all the time. that's not going to get us anywhere. >> you made a lot of changes. you revamped your cio office. you revamped putting two co-operating chiefs in charge. people are wondering, is it

enough what you did? in other words, how punitive will regulators come down on you? what kind of sanctions or fees, anything on the horizon that we should expect from the investment community? >> look, we've shown all these possibility lawsuits. read it at your leisure. we put together our corporate tss businesses because we serve like 10,000 major corporations and governments around the world. we lend $1 trillion to people. we are in the banking business. we raise capital for them. we lend money to them. that's what we focus on. yes, we have this residual promise from the past. we're not perfect. we'll always make mistakes. i've never seen a business that doesn't make mistakes. it's how do you recognize it. >> all right. let's talk about lending then. what are you seeing out there? from your vantage point in terms of mortgages, in terms of lending, the credit? >> the large corporate world is wide open. credit is readily available. the high yield mark is open.

obviously, ipo with mortgage is very important for start-up companies. middle market, ten straight quarters of growth. i'm talking about growth of 12 to 15%. small business, all-time record now. credit card spend is up 12% for us. i think the industry is up. auto lending is up. mortgages are still too tight. i call that flat. my guess is it'll open up more, particularly as these are finalized. whanc >> what about housing? last time we spoke, you said that housing has bottomed. you still stand by that? >> yeah, because every single thing about housing is flashing green. there's not one thing flashing red. we're creating 3 million more americans every year. household formation is going up. homes for sale is now six months supply, not 12 month. the shadow inventory, which is still high, but has been coming down. banks are better at short sales. all-time afford nability of hom and mortgages. home prices in the worst markets

are now up. phoenix is up 20, 30%. >> that was one of the hardest hit. >> las vegas is up. smebt sacramento is up. the economy will drive housing. if we get the economy going, housing clearly turns. if it goes back to normal building, 1.3 million units a year, which most economists say we're going to have to do soon. remember, we've added 15 million americans in the last five years or so. that's going it add 2 million jobs right there. so housing could become the thing that starts driving, help drive the economy if we get this economy going. >> isn't the industry still working through a lot of assets? isn't the industry still looking at the housing recovery largely a function of refinancing? how do you get new private money going into the mortgage market? >> so we are -- people who do mortgage are doing a lot of purchase mortgages and re-fi. 4.5 million homes are being sold a year.

mortgage is still a little tight. i think one of the things that would be really good, the regulators, legislators, and businesses fix as soon as we can, what are the new rules around mortgages? it is too it tight. appraisals are too tight. income appraisals are too tight. underwriting is too tight. we don't know the new rules on capital requirements. if we get that finalized, i think mortgage will get looser and it will help housing. >> okay. certainly we are seeing that in the numbers. in terms of europe, it feels like we were focused, the markets were so focused on the election for the last several weeks. now the last couple of days, we see europe becoming an issue again. what's your take? i know you can't do in ten minutes. >> it's going to be roller coaster. there's no ah-ha moment. there's no quick fix. number one, they have to make sovereign debt good. you can't have nations survive when their sovereign debt is not made good. the ecb made this big statement about buying unlimited amounts. number two, you have to stop the potential of a bank run, particularly in italy and spain. the problem with the the greek exit isn't the greek exit.

it's that it can cause a run of the banks in italy and spain. they're getting that fixed by having to call the banking union, fdic. three, they have to rewrite the treaty between the nations. it has to be more flexibility, common accounting, more common social policies. it has to be carrots and sticks so people can't bar row too much money. if they do all those things, and there's a huge incentive to do it. if they don't do it, you can argue what happened 12 years ago when they seat up the euro. if not, they can have a bad outcome in europe. they have the will. it's hard to figure out the way. the united states, we know the way. it's something around like a simpson-bowles. we need the will. >> that's a great analogy. that's really smart. i guess we could separate it, but can we separate it? is europe going to be america's problem as well? >> it is today. it's a mild recession there. it might get worse, but it's a mild recession. you could say it's doing better than you would have thought considering all the problems they have.

it's partially america's problem. just like america was partially their problem when we had a big downtu downturn. i know the american officials are trying to help them get over this. >> in terms of head count reductions on wall street, we continue to hear the large investment banks cut heads. how do you feel about jpmorgan's head counts entering 2013, considering weak trading volumes, low interest rates, which of course we know are going to be with us until at least the end of 2015? are you going to lay off workers? >> i don't think we're going lay off. you're going to have -- we're a big company. some businesses are going to come down. that's unavoidable. new systems go in place. we enhance productivity. we've always tried to do a good job managing our expenses. even if you see head count come down, i hope it's not because of layoffs. like i said, we see enormous opportunity in asia, small market, middle market, online

banking, digital banking. we're investing in all of these. we've opened 1,000 offices this year. we're going to open more. we're always investing in those things too. that's the future. obviously, try to run an efficient shop. i think what you've seen is people trying to figure out what parts can they afford, what are the cap requirements, try and earn an adequate return. all the companies aren't in the same position. they have structural issues. they're in different parts of the world. we have a great fixed-income business. we have huge flows. they come like 80% of foreign exchange electronic. it's just running through our pipes as people move money through custody and through just corporate accounts. >> you know, i want to get back to that comment you made about electronic. i thought the markets were electronic too. then we had this two-day shutdown. i want to get to hurricane sandy in a moment. what's your take on what went on at citigroup? vikram pandit being pushed out

like that. i know this was a lifetime ago you worked there, but is it the board that keeps messing up? what's going on? >> maria, i have no insights. if i did, i wouldn't share them. >> are you sure? >> i did call vikram up and wish him the best and michael. >> you've got all these technology ceos and social media new technology ceos meeting together in this conference. why is this sector so important to you? is that where the vibrancy is in business today? >> sure. remember, we're still doing basic banking like loans. we have 12 million mobile accounts now. people are moving money. uk you can take pictures of checks and have them deposited. these services are going to grow very rapidly. so i've spent almost a week here meeting these folks and making sure we're geared up for it. electronic exchanges. that's been happening my whole life. this is just another huge wave

of things to make it easier and better for customers. we have to do it. so we will be investing, you know, huge amounts of our time and money in making sure we serve customers properly in the mobile and digital world. >> i had an ah-ha moment coming here. i used my iphone to check in at the airport. i thought that was great. what does the pipeline look like for ipos? >> you're going to walk into a store or branch, and it's going to bring up your i.d. if it's a starbucks, they're going to automatically get your coffee for you. you won't even have to pay. it will go to your account. all these things are coming. i don't know the exact pay. the ipo market has slowed down a little bit. i always look at it as the tip of the spear. it filters back into the equity markets. venture capitalists need the ipo market to have exits to return money to their investors. it'll come back. it will come back. my whole life has had its own kind of cycle. it will come back. there is a large pipeline of things waiting.

there are a lot of companies waiting. the job act did help because i think some of those prior regulations hurt small ipos. so i think it's very important. we always look at unintended consequences of laws. that act will probably help some of these companies go public. >> that's a real positive. okay. you said everything is electronic. i was under the impression the markets were electronic. if we have a storm, we don't have to shut the whole market globally down. it seems like that's what we did with hurricane sandy. i know your people at jpmorgan had their own struggles. i want to ask you about the struggles, how everybody is. first, were you comfortable with shutting down the market like that? >> first i want to say because there are still a lot of people struggling in new jersey and new york. our hearts go out to them. we're doing everything we can to help. we gave $5 million to the red cross. we're going to do an additional $5 billion of incremental lending of small business on top

of what we already do. our own employees did a great job. our bank was open on monday and tuesday. >> i spoke to somebody in your company. >> we move trillions of dollars around the world. the stock exchange was closed. the bond markets. that was the decision they made for their reason. you can argue one day or two days. they were in the middle of the storm. had they been somewhere else, i don't think that would have been the issue. a lot of markets are up and running. like i said, a lot of banks were up and running. >> i know you've done a lot for the victims. you just mentioned what you've been doing in terms of sending money. so in other words, it had to be. we had to shut down the markets. even though a lot of it is electronic. >> i've not been told the details about why they did that. the new york stock exchange was right in the middle of the storm. even people getting to work was an issue. the first thing to me is the safety and soundness of the people. >> jamie, good to have you on the program. >> great to be here. thank you. >> we'll take a short break.

keep it here. we have a lot more on this busy edition of the "closing bell." coming up, instant reaction to jamie dimon's exclusive and revealing interview with maria. >> to me, the most important thing is we solve the short-run fiscal cliff. if we do that, the economy can boom. >> find out how our market pros will invest on what dimon just said. plus, jcpenney less? another disastrous earnings report. is former apple genius ron johnson's vision for the retailer getting blurry? herb greenberg is ready to rip on this special edition of the "closing bell." how do you trad? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start.

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this is the greatest economic engine ever built. you go around here, the innovation, the growth, the work ethic, the capability, the ability to spend capital expenditures. america is still the best there is. so to me, this is the greatest engine. it's growing slowly. it's waiting to be ignited. i personally think -- i have enormous respect for the president. i just think that business and government collaborating has a much better chance at igniting that than this antagonistic behavior. >> that was moments ago with my

exclusive interview with jamie dimon. let's bring in our next guests for their reaction about what we just learned. what did you learn? tell me about your take we just heard from jamie dimon about jpmorgan. you own the stock, right? >> i don't own the stock this minute. i'm much more likely to own the stock given the news on the buyback. jamie sounded good. he really sounded resilient, positive. i really expected him to actually, you know, be a little more willing to take on the government. i think he really talked about working together with the government. he had some praise for the president and said he respects him. i think that's a little change of tactic of late and being a little less combative. i hope it's reciprocated by washington. >> you know, i was struck by the talk on capital on the fact that, you know, jpmorgan has to have this 2.5% buffer while, you know, bank of america has 1.5%.

others have even lower than that. marty, what's your take on that? >> yes, you have to separate out this sifi impact, which is solely related to the international significance of a company. this isn't related to the quality of the company, the riskiness of the company. this is just their entanglement to the international economy. jpmorgan and citigroup are international firms. that's why they got the bigger level. when they get through the c car process, it's more about risk management. that's where they get the benefit and come out with a stronger result. >> also interesting to hear him suggest that we're not going to see big layoffs at jpmorgan. we just saw that huge layoff announcement. a lot of the investment banks continue to talk about head count reductions. >> well, jpmorgan continues to be one of the strongest banks in the world. they're able to grab market share.

i think jamie is really bullish on the ability for the american economy to rebound. clearly this whole fiscal cliff thing scares everybody. if you have got the horses in place, and the american economy does move, i agree with him. it's going to move if we resolve this. there's $2 trillion in cash on the sidelines. there's a lot of activity waiting to happen. if you're staffed and ready to go and can maintain that, you're in a good position. >> yeah, but guys, let's not forget dodd frank is not going anywhere. the volcker rule is not going anywhere, particularly now that the president has been re-elected. should we be cautious on jpm and the banks because of the regulatory environment? is that why you don't own the stock right now, anton? i know you're a big bank investor. >> i'm a big bank investor. i think, quite frankly, i really wanted this whale issue to go away. i wanted to see what the regulators thought. i think the fact that they allow jpmorgan to do this buyback makes me feel more comfortable with it. so i'm inclined to be an owner

of jpmorgan at this point in time. i think it was a great vote of confidence. again, it's just a question of moving things out of my portfolio. i feel better about the stock after that. i still worry about the big banks exposure to lie boar. it hasn't been resolved yet. i know in the u.k. they're arresting a bunch of traders over there. we're all on pins and needles waiting whether or not they have any exposure to the issue. >> that's right. and you know, he has not said anything on that, nor has anybody else, unless they were publicly announced involved in it. what do you think about that, marty? as well as the regulatory environment. >> if you think of the regulatory environment, there's a lot that's already been accomplished. the banks in the sense of increase their capital ratios to a level. there's still some hard constraints. they'll be able to deploy more capital, increasing their dividends, and also being able to buy back more shares. that reflects the strength of

the bank's balance sheets, the derisking is already through the process. there's some incremental expenses they have. litigation is a thing you talked about. you need to be able to be prepared for. maria, you brought up the $6 billion. that's really one quarter's worth of earnings for jpmorgan. there is cushion there to absorb those litigation expenses and still be able to not really have to touch their capital. from a large part, there's incremental head winds but a lot of that pressure is behind us at this point. >> so would you buy jappmorgan stock right now? >> we have a buy on the stock. if you look at what they're earning today at about 16% return on tangible common equity, that compares to a 12% cost of equity. that premium should say they should trade at a premium to their tangible value, which we estimate will grow to $42 next year. we think the stock price should be above $50 instead of hanging

around 40 where it is today. >> obviously a buyback announcement or dividend would help that. you know, i sort of pressed him on, you know, what kind of scrutiny we were going to get from the fed because the fed and the regulators are in charge in terms of how this company and the entire sector allocates capital. isn't that right, anton? >> yes, it's very right. actually, we're going get some -- we got some positive news today on how the fed is going to work with it. the banks have a chance to submit their results to the fed, and the fed is going to come back more quickly and say, no, try again. rather than fail people right away. they'll have a chance to put a final submission in by early january. i think that's really good news for the banks. i think particularly for the banks that got rejected last year like citi and sun trust. i think they're going to be able to push the edge of the envelope. the fed may push back. it will be give and take this time and a much smoother process. i completely agree there's plenty of capital in this industry. buybacks and dividends. we talked about it last year.

we didn't get what we wanted. i hope we get more this year. i expect we will. >> one bank stock you would buy right now, anton. >> i would buy citi right now. >> all right, guys. great to have you on the program. thank you so much. we appreciate your time tonight. see you soon. really appreciate it. up next, mixed signals at jcpenney. we're going to tell you about it. the retailer is mailing a letter to customers explaining its shift away from coupons. get this, the letter has a coupon attached. this is no joke. it's real and we'll discuss what's going on with an analyst and our own herb greenberg in a few minutes. stay with us on that. up next, the white house reiterating a threat today to veto any bill extending tax cuts for those making more than $250,000 a year. our john harwood up next on ideology. for 30 some years at manytendet

different park service units across the united states. the only time i've ever had a break is when i was on maternity leave. i have retired from doing this one thing that i loved. now, i'm going to be able to have the time to explore something different. it's like another chapter.

welcome back. want to get to bertha coombs right now. she has breaking news. >> maria, another ethics related resignation this afternoon. this time at lockheed mountain. the board there announcing they

received a resignation from christopher, the incoming ceo. would be the ceo effective in january. they said they accepted his resignation after an ethics investigation confirmed he'd had a close personal relationship with a subordinate. meantime, marilyn houston will now be the new ceo effective january. >> all right, bertha. thanks very much. meanwhile, president obama playing the veto card today in early negotiations on solving the fiscal cliff. in fact, our chief washington correspondent john harwood now with more details on what the president said. >> maria, he reiterated the position he's held for the last two years throughout the campaign. you have to listen closely to the words used by the principle negotiators. first was john boehner today, who with drew a line not against additional tax revenue but only against the idea of raising top rates. >> listen, the problem with raising tax rates on the

wealthiest americans is that more than half of them are small business owners. we know 700 no,000 jobs would b destroyed. we also know it would slow down our economy. >> and by the same token, president obama came out in the east room, and the line he drew was not in favor of higher -- insisting on higher tax rates, it's that we need more tax revenue from people at the top. >> i'm not whetted to every detail of my plan. i'm open to compromise. i'm open to new ideas. i'm committed to solving our fiscal challenges. but i refuse to accept any approach that isn't balanced. >> so the keyword for the president is balanced. but more than one way to get there. maria, just before i came on air, got a statement from the bipartisan policy center in washington, which has been urging the two sides to come together on a simpson-bowles

type solution. they said they were encouraged that both president obama and speaker boehner were showing flexibility. good sign at the outset of these negotiations. >> all right. that's good news, john, that we're not all sticking to ie deeologies. up next, what are they thinking over at jcpenney? we're going to tell you the story. the company has been sending customers a coupon attached to a letter explaining its shift away from coupons. we'll talk about this marketing mix-up and the retailer's shaky future up next. then later, more pain down the road for disney on the heels of its revenue and ensuing stock stumbles. we'll get the disney trade. stick around.

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with features like scanning a barcode to get detailed stock quotes to voice recognition. e-trade leads the way in wherever, whenever investing. download the ultimate in mobile investing apps, free, at e-trade. welcome back to the "closing bell." jcpenney reporteding earnings today. the company has been banking on its new strategy of low prices and no coupons. doesn't seem to be working, though. in fact, we want to talk to rick snider, a retail specialist at maxim group and our own herb greenberg joining us on this conversation. so we told you earlier, herb, you started out the year positive on this company. now you say you were wrong. do you think johnson is trying to pull off the impossible task here? >> i think he's trying to pull off the admirable task. i think it's too soon. he said three years. he gets paid in, say, five or six years. i think the bigger issue right

now, and everybody's looking at it, is whether he can get beyond liquidity gap that people are wondering about and concerned about. >> well, i mean, the letter he sent to folks, one of our core values is that you shouldn't have to wait for a sale or a coupon to get great value. and then he sent a coupon out. let's look at something one of our producers received recently. this is really amazing. it's a piece of mail from jcpenney. there's the ceo's name in the return address spot. from the desk of ron johnson. here's the letter. it says, one of our core values is that you should not have to wait for a sale or a coupon to get great value. then just below that it says, as an incentive, i'm enclosing a $10 gift, a coupon. there it is. a $10 coupon. what kind of a mixed message is this? rick? your thoughts? >> well, maria, i think if it looks like a duck and it walks

like a duck, it's certainly a coupon. they can call it a quacks like n it is coupon. this specific coupon i believe was $10 off for a purchase of $10 or more. so they are giving their inventory away. i think this was a more of a desperate attempt for them to get rid of inventory than anything else. >> can i add one thing there? on the call when he was asked about that, when somebody said that thing he said whatever you want to call it. they are hedging on this one. >> they are and they are also hedging on their no promotions strategy because they say they will be on sale for black friday and so on. i think they are starting to realize that after that quarter they put up that maybe this strategy is not what they thought it was to begin with. >> so you think they have already given up and gone back to couponing then? >> i don't think they have given

up completely but they need to drive traffic and this is one way they are going to do it. i also think that they needed a clear inventory. if you were in the stores the inventory all looked old about the time that coupon went oout. >> i guess at the end of the day investors want to see who is responsible for missteps, responsible for market value losses. should ron johnson resign? >> maria, the answer is no. this is a speculative turn around. based on everyone i talked to and everything i hear he should spend a lot more time in plano, texas and that seems to be a real issue. >> thanks very much. great insights on this. we will keep following it. how long will wall street keep disney in the doghouse. stock has had a great year and why should investors by the stock now? ♪

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disney shares not looking too magical today down about 6% after the missed revenue expectations on advertising results. do traders see more feign to come or is this your chance to buy into disney after great 2012 stock up about 40% for the year. options action contributor, what do you want to do with disney? option traders were looking on the jed iside of things. they were trying to draw a wet line in the sand. t that level is about $46. selling about 3,000 put spreads is what they did. if the stock trades slightly lower from here they are willing to buy disney. >> you want to see it go down before you get in then? >> what they are saying is they are going to get paid to wait

for the stock to trade lower. they are willing to buy the stock at $46 here. if you are looking to buy disney it had a selloff here. you have fantasy land coming for them on december 6. the christmas time is their busy time of the season. you pick a level. if it trades slow here that is when you get in. >> we'll leave it there. for more options action be sure to stay tuned to options action after "closing bell." we'll see you then. we'll wrap up the dismal week on wall street next. [ male announcer ] the markets keep moving. make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futures and forex with in-depth analysis. it's an all-you-can-eat buffet for all things trading. thinkorswim by td ameritrade.

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[ male announcer ] make sure america's ready. make sure you're ready. at devry.edu/knowhow. ♪ before we say good night let's look at the day on wall street today. after all the volatility that we saw it ended very far from where it began. the dow industrials up 4 points. the nasdaq picked up 9 and a quarter points. the s&p 500 up just two points on the session. a fractional move. and before i say good night a big